When it comes to insurance plans, you cannot afford to make mistakes. It is meant for your financial security, but more often people buy an insurance plan that is popular in their friend circle and much liked by their peers. The drawback of this kind of purchase is that in the long run you realize that the plan isn’t good enough. The same can be said for term insurance plans.
However, buying the right insurance plan for yourself and your family is important because you don’t want to keep paying the premiums for an insurance plan that is not giving you any benefits. And surrendering a plan is not a smooth task. So, before you buy plans, you need to Compare term insurance plans online.
If in a case, you do want to leave your term insurance plan and get a better one, then every company has to offer a surrender value which is mandated by the Insurance Regulatory and Development Authority of India (IRDAI).
What is surrender value?
It is one of the best things done by insurance companies today. The insurer is supposed to retain a certain amount of money to the policy holder in case they want to terminate their insurance plan before its maturity. Compare Your Plan by Term Insurance Premium Calculator, andThe company calculates the surrender value based on the premiums paid by the time of termination. They will deduct charges from this amount and return the balance to the policyholder as the surrender value.
Is surrender value applicable on all term plans?
The answer to the above question is no. Surrender values only apply to those plans which cater to the component of savings or investment in plans like ULIPs. Other cases where surrender value is applicable is when a single premium is paid for covering the long term of the plan.
To phrase it in other words, surrender values are not applicable for regular term plans that have regular annual premiums. It is valid for customers who have bought a term plan with return of premium also known as TROP.
In a 10 year insurance plan, the surrender value will become applicable in the first three years of regular payment of premiums. In cases where the term of the insurance plan is less than 10 years, then the term plan will become valid after first two years of regular payment of premiums. And if you do decide to terminate your policy before the surrender value term, i.e., two or three years, then you may not get any money at all.
